A Company Uses Periodic Inventory in Connection with FIFO Costing

question 16

Multiple Choice

A company uses periodic inventory in connection with FIFO costing. The company began the year with zero inventory balance. They had the following transactions during the year: At the end of the year, they counted the inventory and found 55 units remaining. How much was the Cost of goods sold for the year? (Please round to the nearest whole dollar.)

• A)$541
• B)$582
• C)$626
• D)$680

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Definitions:

Confirmatory Value

The aspect of financial information that helps users confirm or correct prior expectations.

Fair Value

The price at which an asset would be bought or sold in an orderly transaction between market participants at the measurement date.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase price, not their current market value.

Economic Entity Assumption

The economic entity assumption is an accounting principle that treats a company as a separate entity from its owners for reporting purposes.